Beyond Brussels: WTO digital talks get off to uneasy start

This week more than half the World Trade Organization’s membership formally kick-started negotiations towards a ‘plurilateral’ agreement on e-commerce.

The participating members include the United States, the European Union and China. Large emerging markets such as India and South Africa decided not to participate in the project.

This week’s meeting in Geneva, which was convened by Australia, was mainly about trying to scope out the contours of a possible deal, which members hope to ink next year. Decisions taken were mainly about process: participants will table negotiating texts by the end of April, and meet again for a new round of negotiations on 13-15 May.

The talks got off to an uneasy start.

China joined the announcement of these negotiations at the last minute in January on the sidelines of the annual Davos meeting following misgivings over doing so due to its trade tensions with Washington. The current chronic trade confrontation with Washington also reverberated on Wednesday’s meeting. Other tensions in the WTO over the status of developing countries were also reflected in the meeting.

In a joint statement officialising their decision to start negotiations on rules for trade in the digital era, participants said they sought “a high standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO members as possible”.

Developing country differentiation?

The statement also said: “We recognise and will take into account the unique opportunities and challenges faced by members, including developing countries and [least-developed countries], as well as by micro, small and medium sized enterprises, in relation to electronic commerce.”

On Wednesday US Ambassador to the WTO Dennis Shea said: “This initiative will be successful if we are able to conclude an ambitious, high-standard agreement that is enforceable and has the same obligations for all participants.” This indicates the US will not tolerate any special and differential treatment for countries calling themselves ‘developing’ in the WTO.

WTO members doing so include the likes of China, Brazil and Korea, which the US – and some if its allies such as the EU – are trying to nudge into taking on the same, i.e. more stringent, WTO obligations as rich countries. Beijing and its allies are balking at the idea.

The objectives of the negotiators are to set a framework enabling trade in goods or services via the internet and to tackle thorny regulatory barriers related to the increasingly digitalised world economy. Negotiating objectives include making permanent a currently temporary WTO moratorium on customs duties on products traded online, address market access barriers, set a common framework of rules in areas such as consumer protection, and tackle the issue of cross border data flows. Some members emphasise the need to include provisions for small and medium-sized enteprises.

The EU’s current objectives for the negotiations include introducing rules to tackle unsolicited e-mails, electronic contracts, establish systems to build trust online and develop consumer protection regulatory frameworks. The EU is among those wanting to make permanent the moratorium on customs duties on e-commerce.

The European Services Forum, the leading business association for EU services industries, for its part also wants the deal to cover transparency in regulations, electronic procurement, telecommunications rules, relevant market access commitments in the GATS and regulatory cooperation among signatories of the agreement.

Data flows

US objectives for the negotiation – which are in broad alignment with signatories of the Asia-Pacific trade deal CPTPP such as Japan, New Zealand or Australia – include rules to enable free flow of data and ban data localisation requirements.

The absence of EU position on data flows in the WTO so far has already raised hackles with Washington. The tensions over the issue hark back to the now-defunct TiSA plurilateral negotiations on services, when the EU was not in a position to table language on data flows.

Since TiSA, the EU has moved on. The EU has developed new language in its most recent bilateral trade agreements that could well land with e-commerce negotiators in the coming months. In some of its recent bilateral trade talks such as with Chile and Indonesia the EU has tabled language on data flows that bans forced data localisations but entirely carves out personal data privacy laws from the scope of these obligations. If and when e-commerce negotiations move to the data flow topic that carve-out will likely be one of the most contentious topics.